Sunken Sanchi Included in US Sanctions List against Iran

Image Courtesy: The White House under public use license

Iranian tanker Sanchi, which sank in the East China Sea on January 14, 2018, has been included in the new comprehensive list of over 700 sanctioned individuals, entities, aircraft and vessels designated by the United States.

The Sanchi, manned by 32 mariners, sank after colliding with CF Crystal on January 6, claiming the lives of its entire crew.

The crude oil tanker (IMO 9356608) was listed by the U.S. under all of its previous names (Gardenia, Seahorse and Sepid) due to its links with Iran’s national tanker company.

The United States reimposed sanctions on Iran’s energy, shipbuilding, shipping, and banking sectors, on November 5, as a way of pressuring Iran to abandon its nuclear program, development of ballistic missiles and other “malign activities.”

Specifically, 50 Iranian banks and their foreign and domestic subsidiaries as well as over 200 persons and vessels in Iran’s shipping and energy sectors have been blacklisted.

The US Department of the Treasury said that doing business with Iran’s national maritime carrier, the Islamic Republic of Iran Shipping Lines (IRISL), and oil transport giant National Iranian Tanker Company (NITC) would be sanctionable.

The sanctions relate to the companies’ subsidiaries and vessels owned by NITC and IRISL, or in which the two companies have interest.

“Each year, these vessels move tens of millions of barrels’ worth of Iranian oil, as well as Iranian natural gas, which constitute a major source of revenue to fund the Iranian regime’s malign activities. It is essential to close off this funding stream to Tehran,” Treasury’s Office of Foreign Assets Control (OFAC) said.

“The Iranian shipping industry is reviving previously employed deceptive practices in an effort to obfuscate IRISL or NITC’s interests in vessels and other property. Among the IRISL vessels identified today are four vessels that recently underwent name and partial ownership changes but that are still property in which IRISL has a blockable interest. The global maritime industry should be on alert for Iran’s use of such tactics and make every effort to thwart Iran’s use of their jurisdictions to create front companies; to revoke their flags from IRISL and NITC vessels; and to deny other means that enable Iran to conceal its interest in the vessels,” OFAC added.

Iran, the third largest OPEC producer, could continue exporting its crude oil to countries that are not affected by the sanctions, most notably China, South Korea, India and Japan. However, the country’s oil exports are expected to be slashed.

Market analysts predict that Iran will try to keep production at a higher level, with some of the excess production likely ending up in the floating storage. Tying up of Iranian tanker tonnage for the purpose of storage is good news for global commercial fleet as it would spur demand for tankers, especially as OPEC countries rush to compensate for Iran’s reduced oil exports.

There is a lot of uncertainty as to where Iranian crude oil might end up, nevertheless, the overall geopolitical tensions between the U.S. and global powers, including most notably China, are ushering in changes to global trade lanes, pawing way for increased ton mile patterns.

Specifically, the trade war between the U.S. and China resulted in China freezing all of its oil imports from the U.S. in August and September, switching to West Africa for its sweet crude, according to BIMCO’s Chief Shipping Anaylist, Peter Sand.